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Hello everyone! Good day! 

Let us dive into some news from past week 

Dive in!

Why did the Supreme Court strike down the electoral bond scheme ?

A 5-judge bench headed by the Chief Justice, D.Y. Chandrachud termed the electoral bond scheme ‘unconstitutional’ and observed it violated the Right to Information

The electoral bond scheme was introduced in The Finance Bill, 2017 during Union Budget 2017-18. The electoral bonds allowed individuals or entities to make anonymous donations to political parties. Under this scheme, both individuals and companies could buy bonds in multiples of ₹1,000, ₹10,000, ₹1 lakh, ₹10 lakh or ₹1 crore without any upper limit. The donations made were 100% tax-free under Section 80GGC. The bonds were only sold through State Bank of India. Till April 2023, out of the Rs 12979 crore donations via bonds, 51% was received by BJP and the next party which received the most was Congress but a comparatively lower 8.6%.

In its verdict, the Supreme Court observed that:

Huge donations can lead to quid pro quo (improper influence) arrangements between the donors and political parties. Some of the amendments in the Companies Act, 2013 and Finance Act, 2017 allowed unlimited political donations without disclosing the name of the political parties in the Profit & Loss (P&L) account. According to the court, this would allow corporations to influence the political processes and would require benefits in return for the donations. Moreover, according to the Finance Act, 2017 political parties need not disclose the contributions above Rs.20,000 received through electoral bonds.  

The Supreme Court has directed the SBI to immediately halt issuing electoral bonds. SBI must provide details of all bonds purchased by political parties since April 12, 2019, to the Election Commission of India (ECI) by March 6. The details include Date of purchase, Purchaser name and Bond denomination. ECI must publish all received bond details on its website by March 13, 2024.

India turns investor favorite and rises to Top 5 from Fragile 5

In 2013, a group of five countries, including India and Indonesia, were dubbed the "Fragile Five" due to their perceived vulnerability due to a heavy reliance on foreign investment to fuel their economies. Back then, these nations carried a significant risk factor in the eyes of investors. However, things have changed dramatically. Today, thanks to improved financial positions reflected in their credit-default swaps, India and Indonesia have undergone a remarkable image makeover. They've gone from being seen as risky bets to becoming investor darlings, experiencing a complete 180-degree shift in market perception. This remarkable turnaround highlights the dynamic nature of international finance and the evolving investment landscape.  

India's bonds have been rising steadily for the past few months, fueled by two exciting developments – Possible inclusion in global investment indexes and Lower government debt sales :  The government announced plans to borrow less than expected, further reassuring investors and leading to more bond purchases.  

As a bonus, the government even plans to shrink the budget deficit. All in all, it's clear that India's ‘Fragile Five’ days are long gone, with both domestic and international investors increasingly confident in the country's economic future.

Collateral-Free Loans for Informal Micro Enterprises 

A specialized program has been introduced to facilitate collateral-free loans up to Rs 20 lakh for informal micro enterprises (IMEs) exempt from the Goods and Services Tax (GST) regime. As per the circular issued by Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to its member lending institutions (MLIs), lenders will receive up to 85 percent guarantee coverage for unsecured loans up to Rs 20 lakh to IMEs registered on the Udyam portal. These tailored measures aim to address both demand and supply-side requirements, encouraging Member Lending Institutions to increase lending and enhance credit flow to IMEs in the MSE sector. Notably, Finance Minister Nirmala Sitharaman announced in her budget speech for 2023 a fund infusion of Rs 9,000 crore in the CGTMSE corpus to facilitate additional collateral-free credit of Rs 2 lakh crore to MSMEs and to reduce the cost of credit by 1 percent. 

More news from the week ...

  • RIL Hits ₹20 Crore Market Cap – Reliance Industries became the first ever company to achieve a market cap of ₹ 20 crore during the intraday session on the weekdays of trading where the shares gained 1.89% to touch the record high of ₹2,957.8 apiece 

  • UK and Japan fall into recession : Japan and the UK fell into recession in the second half of 2023. Japan's GDP contracted unexpectedly, while the UK's decline occurred ahead of Prime Minister Rishi Sunak's promised growth initiatives, with a 0.3% GDP contraction in the three months leading to December. 

  • Farmer protests in Delhi : Farmers from Punjab, Haryana, and Uttar Pradesh, with over 200 unions are protesting in the capital post inconclusive talks with Union Ministers. The demands include legal guarantees to Minimum Support Price (MSP) for all crops, Swaminathan Commission's formula implementation, full debt waiver for farmers, pension for farmers and laborers, and withdrawal of cases against protestors from the 2020-21 demonstrations. 

  • India launches UPI services in Sri Lanka and Mauritius : In a virtual ceremony, India launched the UPI services in Sri Lanka and Mauritius. This will help Indian nationals visiting Mauritius and Sri Lanka to make payments through UPI.

Check out the awesome content from Ambrela 

Want to know more about the Budget announcements? Check out the reel below:  

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Visual of the Week

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Prime Minister Modi inaugurated Abu Dhabi's first Hindu stone temple, the 'BAPS Mandir', making it the UAE's inaugural traditional Hindu temple. The temple, built on 27 acres of land gifted by UAE leaders, is a significant milestone in cultural exchange. Constructed with 18 lakh bricks, seven lakh man-hours, and 1.8 lakh cubic meters of sandstone from Rajasthan, it follows the Nagara architectural style, akin to the Ram Temple in Ayodhya. This temple serves as a symbol of unity and friendship between India and the UAE.

Test you knowledge !

Can u guess the other 3 countries in the initial Fragile 5 countries along with Indian and Indonesia

[A]   Vietnam, North Korea and Venezuela

[B]   Turkey, South Africa and Brazil

[C]   Pakistan, Bangladesh and Sri Lanka   

[D]   Ukraine, Argentina and Cambodia

“Fragile Five” is a concept used by a financial analyst at Morgan Stanley in August 2013 to describe emerging market nations that have grown overly reliant on risky foreign investment to fund their growth aspirations. It comprised Indonesia, Brazil, Turkey, India, and South Africa. 

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